ADNOC-ENI Agreement

Copyright © 2020 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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NewBase Energy News 22 January 2020 - Issue No. 1311 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE: ADNOC, Eni sign framework agreement on CCUS, R&D
WAM/Nour Salman
The Abu Dhabi National Oil Company, ADNOC, signed today, a strategic framework agreement
with Italy’s energy company, Eni, to explore new opportunities for collaboration in carbon capture
utilisation and storage, CCUS, and additional strategic opportunities in research and development
across the oil and gas value chain.
The agreement brings together
two leading energy producers
and harnesses their world-class
talent and technologies to
unlock value in areas of
strategic importance to both
companies while reinforcing
their existing partnerships
across the oil and gas value
chain.
It also builds on ADNOC’s
recently announced
sustainability goals, particularly
its commitment to decrease its
greenhouse gas, GHG, intensity
by 25 percent by 2030, enabled
by its industry-leading CCUS
programme.
The framework agreement was
signed by Dr. Sultan bin Ahmad
Sultan Al Jaber, Minister of State and ADNOC Group CEO, and Claudio Descalzi, CEO of Eni.
Commenting on the agreement, Dr. Al Jaber said, "We are pleased to sign this strategic framework
agreement with Eni that builds on our successful partnerships across the oil and gas value chain.
Importantly, the agreement underscores ADNOC’s targeted approach to value-add partnerships
that is enabling us to unlock and maximise value from Abu Dhabi’s substantial hydrocarbon
resources as we deliver our 2030 smart growth strategy."
"We look forward to swiftly developing this framework agreement to another new mutually beneficial
partnership with Eni as the agreement offers significant potential for exciting and sustainable growth
opportunities."
Under the terms of the agreement, ADNOC and Eni will jointly explore opportunities for collaboration
in relation to innovative geomechanical and geochemical workflows for CCUS programmes as well
as in advanced analysis and modeling of thermally induced fractures in oil and gas reservoirs.
www.linkedin.com/in/khaled-al-awadi-38b995b

Geomechanics refers to the study of how subsurface rocks deform or fail in response to changes in
stress, pressure, and temperature, while geochemistry relates to the study of the chemical
composition of the earth’s crust. Both geomechanics and geochemistry relate to the development
of CCUS programmes.
Descalzi said, "This MoU further demonstrates Eni’s strong commitment to strengthening our
important partnership with ADNOC, such an important actor, and generating positive impact across
our value chain."
"Both companies," he added, "will collaborate to pursue new mid-term solutions aimed at leading
the current energy transition in line with Eni’s decarbonisation strategy aimed to achieve net zero
emissions in its upstream business by 2030 and ADNOC’s recently announced sustainability goals.
This is a holistic collaboration that will further strengthen the alliance between the two companies
by designing technological trajectories for the evolution and transformation of the upstream and
downstream businesses."
The two partners also agreed to assess additional strategic opportunities for collaboration in R&D
that can potentially optimise performance, drive efficiencies and unlock greater value for both
companies. This potential for collaboration in R&D closely aligns with ADNOC’s strategy to drive
innovation and seek new advanced technologies to enable it to maximise value from every barrel
of oil it produces and deliver the greatest possible returns to the UAE.
The potential for collaboration in CCUS by ADNOC and Eni complements ADNOC’s CCUS
programme which has seen the company establish the Al Reyadah facility, the first commercial-
scale CCUS facility in the Middle East.
Currently, the facility has the capacity to capture 800,000 tonnes of carbon dioxide, CO2, annually
and ADNOC plans to expand the capacity of this program six-fold by capturing CO2 from its own
gas plants, with the aim of reaching five million tonnes of CO2 every year by 2030 – the equivalent
of the annual carbon capture capacity of over five million acres of forest.
ADNOC and Eni’s partnership has been growing over the past two years since Eni was awarded a
10 percent stake in the Umm Shaif and Nasr Offshore concession and a five percent stake in the
Lower Zakum concession in 2018. Both awards marked the first time an Italian energy company
was granted concession rights in Abu Dhabi’s oil and gas sector.
ADNOC also awarded Eni a 25 percent
stake in its Ghasha offshore ultra-sour gas
concession in 2018. And in January 2019,
ADNOC awarded two offshore blocks –
Offshore 1 and Offshore 2 – to a consortium
led by Eni and Thailand’s PTT Exploration
and Production Company Limited, PTTEP,
as part of Abu Dhabi’s highly successful
debut competitive exploration and
production bid round.
In the downstream, ADNOC struck a
strategic equity partnership with Eni and
Austria’s OMV in its refining business in
2019. Under the terms of the deal, Eni and
OMV acquired 20 percent and 15 percent shares respectively in ADNOC Refining. The deal also
covered a new trading joint venture, ADNOC Global Trading, established by the three partners.

UAE: SNC-Lavalin awarded contract for 2nd phase of the Haliba field
Source: SNC-Lavalin
SNC-Lavalin has been awarded an engineering services contract from Al Dhafra Petroleum, a joint
venture company between ADNOC and the Korea National Oil Corp and GS Energy. This contract
win is aligned with SNC-Lavalin’s new strategy moving forward to greater growth and engineering
services.
Under the nine-month agreement, SNC-Lavalin will provide front-end engineering and design
(FEED) services for the second phase of the Haliba field, located in Al Dhafra Petroleum’s
concession area. The project’s aim is to develop surface facilities in an optimized manner to handle
long-term production as well as future production prospects near Haliba.
The contract scope of work includes verification of the conceptual studies and design, carrying out
FEED to develop surface facilities required for processing production from the main plant and its
north and south extension areas, execution planning, and designing facilities to handle production
from other close-by prospects.
'This contract is aligned with our focus to leverage our extensive expertise and experience across
our comprehensive spectrum of end-to-end services to our clients,' said Craig Muir, President,
Resources at SNC-Lavalin. 'We are committed to delivering the highest quality services to our client
and help them achieve their objectives. Our teams will ensure we bring the technical knowhow,
agility and innovative solutions that we are known for to this project.'
Al Dhafra Petroleum was established in 2014 as an ADNOC joint venture company with the Korean
National Oil Corporation and GS Energy, to explore and develop untapped fields in its concession
area by leveraging innovation and an agile operating model to improve efficiency and maximize
value. Its goal is to unlock hydrocarbon resources in the emirate and drive a more profitable
upstream business in line with ADNOC’s 2030 Smart Growth Strategy.

UK: increases funding for electric charge points to $13 million
CNBC - Anmar Frangoul + NewBase
The U.K. government is set to double the funding for the installation of electric vehicle charge points
on residential streets to £10 million ($13.06 million). In an announcement Tuesday, the government
said the money – which will be for installations next year – could fund up to 3,600 charging points.
“We want to make electric cars the new normal, and ensuring drivers have convenient places to
charge is key to that,” said Transport Secretary Grant Shapps in a statement.
At the moment, there are over 24,000 publicly available charge points, the government said, with
more than 2,400 of these classed as “rapid” charge points.
Authorities also said they were looking at ways of providing information on public charge points,
such as power ratings and locations, “openly available in a standard format.”
They will examine how real-time information – if charge points are working or in use, for example –
could be published. This data could in turn be used in tools such as route-mapping apps and sat
navs.
New car registrations in the U.K. fell by 2.4% in 2019, according to recent figures from the Society
of Motor Manufacturers and Traders (SMMT), with demand for new cars at a six-year low, according
to the organization’s chief executive.
While the outlook is challenging, battery electric vehicle registrations grew to 37,850 in 2019, an
increase of 144% compared to 2018,
when 15,510 were registered,
according to the SMMT. Hybrid
electric vehicle registrations
increased by 17.1% to 97,850 units.
Though these figures looked
encouraging to advocates of these
low emission vehicles, their
prevalence in the U.K. is still small
compared to petrol and diesel cars.
Electric vehicles face challenges,
not least when it comes to
perceptions surrounding range and
charging infrastructure.
The market share for battery electric
vehicles in 2019 was just 1.6%,
while hybrid electric vehicles had a 4.2% share. At the other end of the spectrum, petrol had a
market share of 64.8%, while diesel was 25.2%.

Germany: Tesla moves closer to opening first European factory
Reuters + NewBase
US electric car pioneer Tesla has agreed to buy a property on the outskirts of Berlin, bringing it a
step closer to opening its first European factory, local authorities said.
The US carmaker last November announced plans to build a giant factory in Gruenheide, in the
eastern German state of Brandenburg, giving it the coveted “Made in Germany” label just as local
rivals prepare to launch competing models.
Tesla’s board of directors approved a purchase agreement with the state of Brandenburg on
Saturday to acquire a 300-hectare property,
Brandenburg government spokesman Florian
Engels said in a statement. The state
parliament’s finance committee had already
approved the sale on January 9. A Tesla
spokeswoman confirmed the deal.
The agreement states a preliminary property
price of 40.91 million euros ($45.36 million)
which can be amended if an external review
provides a different value, Engels said.
The property is in a designated industrial area
and is being checked for weapons from World War II as there are most likely unexploded US bombs
still in the ground, he added.
Politicians, unions and industry groups have welcomed Tesla’s move which is expected to create
up to 7,000 jobs in Brandenburg.

China: Could renewables overtake coal in China?
RT + Oil Price + NewBase
As China continues its long and painful move away from coal, solar and wind energy are becoming
increasingly competitive.
In September of last year Oilprice reported an incredible milestone for renewable energy when solar
and wind power became cheaper than coal in most of the world. Now, a new report released this
week by Wood Mackenzie Power and Renewables has heralded another milestone: China will soon
be added to that list of countries in which coal is no longer more economical than renewable energy.
China emerges as key player in green bonds market
This is a massive and massively important development because of the jaw-dropping scale at which
China produces and burns coal. Alone, they consume as much coal as the rest of the world
combined, and any claims that China has transitioned to “clean coal” should be taken with a hefty
grain of salt.
While the fact that coal is being priced out in much of the world marks great progress for the fight
against climate change, especially at a moment that the UN is reminding the world with urgency
that renewables are the path forward, true progress simply isn’t possible without China on board.
And now it seems the winds of change have reached Beijing.
The Wood Mackenzie report, titled China provincial renewables competitiveness report 2019,
reveals that the average levelized cost of electricity (LOCE) of solar and wind power in China is
already cheaper than that of natural gas-fired power and will also overtake coal by just 2026. Wood
Mackenzie Power and Renewables research director Alex Whitworth was quoted:
“Across most of China’s provinces and regions, renewables cost premium remains over coal power,
averaging 26 percent in 2019 for wind and solar, down from over 100 percent in 2010. Twenty-eight
of 30 regions examined in our latest report see premiums of up to 70 percent, and only Shanghai
and Qinghai have cost-competitive renewables today.”

While China is making great progress toward renewable energy’s economic viability on the whole,
some provinces will take a lot longer than other to wean themselves off coal, reports Power
Engineering International.
“Renewables competitiveness is achievable in the next few years for some of China’s regions, but
for others, the journey will not be a sprint but a marathon – taking a decade or more,” they write.
Wood Mackenzie’s Whitworth also commented that “wealthier demand centres on the coast and in
parts of central and northeast China will be first to see competitive renewables costs.
But renewables investment in some areas of northern China, such as Xinjiang, will not be
competitive with coal-fired generation, even by 2040.” While progress will be uneven and the
amount of renewable energy in China’s overall energy mix remains low, the projections are still
hopeful.
The efficiency gains in Chinese solar and wind are occurring in the larger context that China is
moving toward ending subsidies for new wind and solar projects starting next year. This doesn’t
mean that Beijing is not supporting renewable energies and that the move toward cheaper green
energy by 2026 will be derailed, however. In fact, it means just the opposite: the subsidies worked.
Much like in the United States and Western Europe, solar and wind have become economically
viable without governmental support and have therefore outgrown their subsidy programs. Last year
Bloomberg reported that “on sun-drenched fields across Spain and Italy, developers are building
solar farms without subsidies or tax-breaks, betting they can profit without them.
In China, the government plans to stop financially supporting new wind farms. And in the US,
developers are signing shorter sales contracts, opting to depend on competitive markets for revenue
once the agreements expire.”
The Bloomberg article, published last September, highlights the huge importance of these green
energy milestones, pointing out that this new era of economic self-sufficiency in wind and solar
energy has “profound implications for the push to phase out fossil fuels and slow the onset of climate
change” and that “electricity generation and heating account for 25 percent of global greenhouse
gases. As wind and solar demonstrate they can compete on their own against coal- and natural
gas-fired plants, the economic and political arguments in favor of carbon-free power become harder
and harder to refute.”

NewBase January 13-2020 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil declines as market surplus forecast counters Libya worries
Reuters + NewBase
Oil prices eased on Wednesday, extending declines as the International Energy Agency (IEA)
forecast a market surplus in the first half, helping ease concerns about disruptions that have slashed
Libya’s crude output.
Brent crude was down 27 cents, or 0.42%, at $64.32 a barrel at 0309 GMT, after dropping 0.3% on
Tuesday. U.S. oil fell 34 cents, or 0.58%, to $58.04 a barrel, having declined 0.3% the day before.
The head of the IEA, Fatih Birol, said on Tuesday he expects the market to be in surplus by a million
barrels per day (bpd) in the first half of this year.
Oil price special
coverage

“I see an abundance of energy supply in terms of oil and gas,” Birol told the Reuters Global Markets
Forum, while he was attending World Economic Forum meeting in Davos, Switzerland.
“It’s the reason that recent incidents we have seen - with the Iranian general killed, Libya unrest -
didn’t boost international oil prices,” Birol said, referring to the U.S. killing of an Iranian commander
and retaliation by Tehran that sent prices briefly soaring earlier this month.
Libya’s National Oil Corp on Monday declared force majeure on the loading of oil from two major oil
fields after the latest development in a long-running military conflict. “Market participants are already
starting to fade this story - believing that this is a transitory outage,” said Helima Croft, global head
of commodity strategy at RBC Capital Markets.
However, Croft warned that the “multi-year proxy war leaves Libyan production at high risk for
extended outages and there are no indications that the country is close to turning the corner.”
Unless oil facilities quickly return to operation Libya’s oil output will be reduced from about 1.2 million
barrels per day (bpd) to just 72,000 bpd.
Still, U.S. crude production in large shale deposits is expected to rise to record highs in February,
although the pace of increase is likely to be the lowest in about year, the U.S. Energy Information
Administration (EIA) said on Tuesday.
Away from oil fundamentals, markets have been roiled by the emergence of a new strain of a
coronavirus out of China amid concern about the impact of a possible pandemic on economic
growth.

How Russia Aims to Show OPEC+ Compliance This Quarter
Bloomberg - Dina Khrennikova
For the first time in Russia’s alliance with OPEC, the country is changing the way it makes oil-
production cuts.
This quarter, Russia -- one of the architects of the original deal to curb oil output between the
Organization of Petroleum Exporting Countries and its allies -- will be allowed to exclude a type of
light oil called condensate from the production data it submits to the group. The cartel has always
excluded condensates from members’ production volumes, so it was an anomaly for it to be included
for the other members of the OPEC+ group.
This should help improve its implementation with the pact which has been insufficient throughout
2019 as its total crude and condensate output hit a post-Soviet record. Compliance with the deal
has been patchy within Russia and Rosneft PJSC has criticized it saying it’s contrary to Russian
interests. Monitoring compliance may now become even more challenging for Russian-oil
watchers.
1. What is condensate?
Condensates are hydrocarbons which below ground are in the form of a gas but then condense into
a liquid when they reach the earth’s surface. They are usually stabilized before being transported,
by removing any remaining gas and very light liquids. They can then be blended with crude,
processed to make petrochemicals or other high-value fuels or exported. Novatek PJSC exports
stabilized condensates from its Yamal LNG project and processes most of the stable condensate
from other operations in Ust-Luga on Russia’s Baltic Sea coast, with the remaining volumes sold in
Russia and abroad.
Back in the USSR
Russian oil output hit a post-Soviet high last year
Source: BP Plc Statistical Review, Energy Ministry's CDU-TEK, Bloomberg

2. Why is Russia’s condensate now excluded from its OPEC+ target?
Russia’s condensate output has been growing as the nation’s biggest gas producers, Gazprom
PJSC and Novatek, brought new fields online and ramped up output at existing ones. It’s part of a
strategy to boost both piped and liquefied natural gas exports from Russia to Europe and Asia.
This rising output has put pressure on Russia’s compliance with the OPEC+ deal, its currently
acting energy minister Alexander Novak said in November. The country argues that its
condensate, which accounts for 7%-8% of total oil output, should be also excluded from its
production cuts target because countries within the cartel don’t include it. OPEC agreed, and during
its December meeting allowed all non-OPEC allies to exclude condensate from their production
data.
3. Will it help improve Russia’s compliance?
It will, according to the country’s energy ministry. Excluding condensate, Russia’s production cut in
December was 234,000 barrels a day, compared to the crude-only level for October 2018, the
government said in a statement. That’s a deeper reduction than the nation was required to make
under the OPEC+ deal. If you include condensate, the figure was 72,000 barrels a day above its
output target.
Russia failed to fully comply with the pact for most of 2019, with condensate growth just one of the
reasons given by the government. At the December OPEC+ meeting, Novak said exclusion of
condensate is not a loophole allowing Russia to pump more oil and still claim compliance with the
deal.
Under the new deal, lasting through March, Russia pledged to deepen its crude-only production
cuts to some 300,000 barrels a day, from the revised October 2018 baseline which excludes
condensate.
4. How will the market know if Russia is compliant?
Excluding condensate will make it more difficult to independently assess Russia’s implementation
the OPEC+ deal. Previously, Russian oil-watchers -- including Bloomberg -- calculated the country’s
output and compliance using detailed data from the Energy Ministry’s CDU-TEK unit. However,
those figures don’t break down the split between condensate and crude.
The ministry has promised to give the market data relevant to the new deal. Yet in December it
didn’t disclose outright production numbers for crude and condensate, only the increase or decrease
in output for each variety of oil. Separately, Novak told reporters the October 2018 baselines against
which those changes are measured
This patchwork of data does allow oil watchers to know the following: In October 2018 Russia
pumped 10.626 million barrels a day of crude and 795,000 barrels a day of condensate, according
to Novak. As of December 2019, crude production had fallen 234,000 barrels a day from this level
and condensate output had risen by 58,000 barrels a day, according to the ministry.
5. Are CDU-TEK production figures irrelevant now?
Not quite. The current output-cuts deal will be implemented throughout the first quarter of 2020.
OPEC+ will decide on the future of the agreement at the beginning of March. If the pact is extended
past then, and to include only crude output, knowing data on Russia’s total oil production is still
useful for a wider understanding of its oil industry.

U.S. Calls for Immediate Resumption of Libya Oil Production
The U.S. embassy in Libya called Tuesday for an immediate resumption of oil production, increasing
pressure on eastern strongman Khalifa Haftar, who has disrupted output in a show of defiance to
world leaders pushing to end the North African country’s civil conflict.
Haftar stopped the production at virtually all of the nation’s oil fields on the eve of an international
peace conference in Berlin on Sunday. Global oil prices jumped above $65 a barrel on Monday as
the Libyan disruptions coincided with the shutdown of some oil output in Iraq, reigniting fears about
the market’s vulnerability to geopolitical risk in key supply regions.
Davos

Energy Chiefs Tout CO2 Capture as Thunberg Slams Lack of Action
Capturing carbon dioxide from the fossil-fuel industry is key to slowing dangerous global warming,
energy chiefs said in Davos as climate concerns dominated the annual business forum more than
ever before.
Oil and gas producers are under mounting pressure to help prevent a damaging rise in
temperatures, and carbon capture is increasingly luring investors as a tool to curb emissions.
Whether pulled from the exhaust of smokestacks or from the open air, the CO2 can be buried
underground or used to extract oil.
“There are investors that care, that want to protect our environment; those investors are starting to
make a difference for us,” Vicki Hollub, chief executive officer of Houston-based Occidental
Petroleum Corp., said on a panel in Davos. “Within two years we will be building the largest direct
air capture facility in the Permian.”
Occidental’s air capture site will separate carbon dioxide directly from ambient air. The CO2 can
then be injected into oil reservoirs to boost output in Texas’s Permian Basin.
“If we can perfect direct air capture, then we can use it anywhere,” Hollub said.
Climate concerns dominated the panel discussion, and run through the entire program of this year’s
World Economic Forum. Climate campaigner Greta Thunberg spoke to a packed room in the WEF’s
opening session, issuing a sharp rebuke to leaders over the world’s failure to curtail emissions.
Also addressing the climate challenges facing the oil and gas industry was Fatih Birol, executive
director of the International Energy Agency. Birol, like Hollub, touted the potential of carbon capture
to help curtail emissions.
Fatih Birol, IEA executive director, discusses “peak oil” and the need for carbon capture and storage.
He speaks with Bloomberg’s Francine Lacqua.
“Carbon capture is very important because we have still a huge amount of fossil fuels in the market,”
Birol said in a Bloomberg Television interview. “It is the only technology which can marry the fossil
fuels we have -- oil, gas, others -- and our climate goals.”

NewBase Special Coverage
The Energy world - Special Jan-02-2020
The Oil and Gas Industry in Energy Transitions
Insights from IEA analysis
The oil and gas industry is facing increasing demands to clarify the implications of energy transitions
for their operations and business models, and to explain the contributions that they can make to
reducing greenhouse gas (GHG) emissions and to achieving the goals of the Paris Agreement.
The increasing social and environmental pressures on many oil and
gas companies raise complex questions about the role of these
fuels in a changing energy economy, and the position of these
companies in the societies in which they operate.
But the core question, against a backdrop of rising GHG emissions,
is a relatively simple one: should today’s oil and gas companies be
viewed only as part of the problem, or could they also be crucial in
solving it?
This is the topic taken up by the International Energy Agency (IEA)
in this report, which builds on a multi-year programme of analysis
on the future of oil and gas in the IEA World Energy Outlook (WEO)
series.
This report does not aim to provide definitive answers, not least
because of the wide diversity of oil and gas companies and
company strategies around the world. It does aim to map out the
risks facing different parts of the industry, as well as the range of
options and responses. Three considerations provide the boundaries for this analysis. First, the
prospect of rising demand for the services that energy provides due to a growing global population
– some of whom remain without access to modern energy – and an expanding global economy.
Second, the recognition that oil and natural gas play critical roles in today’s energy and economic
systems, and that affordable, reliable supplies of liquids and gases (of different types) are necessary
parts of a vision of the future. And last but far from least, the imperative to reduce energy-related
emissions in line with international climate targets.
These elements may appear to be in contradiction with one another, but this is not necessarily the
case. The WEO Sustainable Development Scenario (SDS) charts a path fully consistent with the
Paris Agreement by holding the rise in global temperatures to “well below 2°C … and pursuing
efforts to limit [it] to 1.5°C”, and meets objectives related to universal energy access and cleaner
air. The SDS and the range of technologies that are required to achieve it provide a benchmark for
the discussion throughout this report.
The other scenario referenced in the analysis is the Stated Policies Scenario (STEPS), which
provides an indication of where today’s policy ambitions and plans would lead the energy sector.
These outcomes fall far short of the world’s shared sustainability goals. The focus of this report is
therefore on accelerated energy transitions, the forces that could bring them about – whether from
society, policy makers, technology, investors or the industry itself – and the implications that this
would have for different parts of today’s oil and gas industry.

Key findings
1.The oil and gas industry faces the strategic challenge of balancing short-term
returns with its long-term licence to operate
Societies are simultaneously demanding energy services and also reductions in emissions. Oil and
gas companies have been proficient at delivering the fuels that form the bedrock of today’s energy
system; the question that they now face is whether they can help deliver climate solutions.
The analysis in this report highlights that this could be possible if the oil and gas industry takes the
necessary steps. As such, it opens a way – which some companies are already following – for the
oil and gas industry to engage with the “grand coalition” that the IEA considers essential to tackle
climate change. This effort would be greatly enhanced if more oil and gas companies were firmly
and fully onboard. The costs of developing low-carbon technologies represent

2. No oil and gas company will be unaffected by clean energy transitions, so every
part of the industry needs to consider how to respond
The industry landscape is diverse and there is no single strategic response that will make sense for
all. Attention often focuses on the Majors, seven large integrated oil and gas companies that have
an outsized influence on industry practices and direction.
But the industry is much larger: the Majors account for 12% of oil and gas reserves, 15% of
production and 10% of estimated emissions from industry operations. National oil companies
(NOCs) – fully or majority- owned by national governments – account for well over half of global
production and an even larger share of reserves. There are some high- performing NOCs, but many
are poorly positioned to adapt to changes in global energy dynamics.

3. So far, investment by oil and gas companies outside their core business areas
has been less than 1% of total capital expenditure
For the moment, there are few signs of a major change in company investment
Capital investment by large oil and gas companies in new projects outside oil and gas supply
spending. For those companies looking to diversify their energy operations, redeploying capital
towards low-carbon businesses requires attractive investment opportunities in the new energy
markets as well as new capabilities within the companies.
As things stand, leading individual companies spend around 5% on average on projects outside
core oil and gas supply, with the largest outlays in solar PV and wind. Some oil and gas companies
have also moved into new areas by acquiring existing non-core businesses, for example in electricity
distribution, electric vehicle charging and batteries, while stepping up research and development
activity.
A much more significant change in overall capital allocation would be required to accelerate energy
transitions.

4. There is a lot that the industry could do today to reduce the environmental
footprint of its own operations
Uncertainty about the future is a key challenge facing the industry, but this is no reason for
companies to “wait and see” as they consider their strategic choices. Minimising emissions from
core oil and gas operations should be a first-order priority for all, whatever the transition pathway.
There are ample, cost-effective opportunities to bring down the emissions intensity of delivered oil
and gas by minimising flaring of associated gas and venting of CO2, tackling methane emissions,
and integrating renewables and low-carbon electricity into new upstream and liquefied natural gas
(LNG) developments.
As of today, 15% of global energy-related GHG emissions come from the process of getting oil and
gas out of the ground and to consumers. Reducing methane leaks to the atmosphere is the single
most important and cost-effective way for the industry to bring down these emissions.

5. Electricity cannot be the only vector for the energy sector’s transformation
A commitment by oil and gas companies to Capital investment in liquids and gases by scenario
provide clean fuels to the world’s consumers is critical to the prospects for reducing emissions. The
20% share of electricity in global final consumption is growing, but electricity cannot carry energy
transitions on its own against a backdrop of rising demand for energy services.
Bringing down emissions from core oil and gas operations is a key step in helping countries to get
environmental gains from using less emissions-intensive fuels.
However, it is also vital for companies to step up investment in low- carbon hydrogen, biomethane
and advanced biofuels, as these can deliver the energy system benefits of hydrocarbons without
net carbon emissions. Within ten years, these low-carbon fuels would need to account for around
15% of overall investment in fuel supply.

6. The oil and gas industry will be critical for some key capital-intensive clean
energy technologies to reach maturity
The resources and skills of the industry can play a central role in helping to tackle emissions from
some of the hardest-to-abate sectors. This includes the development of carbon capture storage and
utilisation (CCUS), low- carbon hydrogen, biofuels, and offshore wind.
Scaling up these technologies and bringing down their costs will rely on large-scale engineering and
project management capabilities, qualities that are a good match to those of large oil and gas
companies.
For CCUS, three-quarters of the CO2 captured today in large-scale facilities is from oil and gas
operations, and the industry accounts for more than one-third of overall spending on CCUS projects.
If the industry can partner with governments and other stakeholders to create viable business
models for large-scale

7. A fast-moving energy sector would change the game for upstream investment
Investment in upstream projects is still needed even in rapid transitions, but the type of resources
that are developed, and how they are produced, changes substantially. Production from existing
fields declines at a rate of roughly 8% per year in the absence of any investment, larger than any
plausible fall in global demand.
Consequently, investment in existing and some new fields remains part of the picture. But as overall
investment falls back and markets become increasingly competitive, only those with low-cost
resources and tight control of costs and environmental performance would be in a position to
benefit.

8. A shift from “oil and gas” to “energy” takes companies out of their comfort zone,
but provides a way to manage transition risks
Some large oil and gas companies are set to Global end-user energy spending by scenario make
a switch to “energy” companies that supply a diverse range of fuels, electricity and other energy
services to consumers.
This means moving into sectors, notably electricity, where there is already a large range of
specialized actors and where the financial characteristics and scale of most low-carbon
investment opportunities are (with the partial exception of offshore wind) a long way from
traditional oil and gas projects.
Electricity provides long-term opportunities for growth, given that it overtakes oil in accelerated
energy transitions as the main element in consumer spending on energy. It also opens the door to
larger and broader reductions in company emissions, relieving social pressures along
the way, although investors will watch carefully the Projections industry’s ability to balance
diversification with expected returns and dividends.

9. NOCs face some particular challenges, as do their host governments
The stakes are high for NOCs that are charged with the stewardship of national hydrocarbon
resources, and for their host governments and societies that often rely heavily on the associated oil
income.
Changing energy dynamics have prompted a number of countries to renew their commitment to
reform and to diversify their economies; fundamental changes to the development model in many
major resource holders look unavoidable.
NOCs can provide important elements of stability for economies during this process, if they are
operating effectively and alert to the risks and opportunities. Some leading NOCs are stepping up
research efforts targeting models of resource development that are compatible with deep
decarbonisation, e.g. via CCUS, trade in hydrogen or a focus on non-combustion uses of
hydrocarbons.

10. The transformation of the energy sector can happen without the oil and gas
industry, but it would be more difficult and more expensive
Oil and gas companies need to clarify the implications of energy transitions for their operations and
business models, and to explain the contributions that they can make to accelerate the pace of
change.
This process has started and company commitments to reduce emissions or emissions intensities
are becoming increasingly common. However, the industry can do much more to respond to the
threat of climate change.
Regardless of which pathway the world follows, climate impacts will become more visible and severe
over the coming years, increasing the pressure on all elements of society to find solutions. These
solutions cannot be found within today’s oil and gas paradigm.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
The Editor :”Khaled Al Awadi” Your partner in Energy Services
NewBase energy news is produced daily (Sunday to Thursday) and
sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscription emails please contact Hawk
Energy
Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
www.linkedin.com/in/khaled-al-awadi-38b995b
Mobile: +971504822502
khdmohd@hawkenergy.net or khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 28 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
consultation for the GCC area via Hawk Energy Service as a UAE operations
base , Most of the experience were spent as the Gas Operations Manager in
Emarat , responsible for Emarat Gas Pipeline Network Facility & gas
compressor stations . Through the years, he has developed great experiences
in the designing & constructing of gas pipelines, gas metering & regulating
stations and in the engineering of supply routes. Many years were spent

drafting, & compiling gas transportation, operation & maintenance agreements along with many
MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences
held in the UAE and Energy program broadcasted internationally, via GCC leading satellite
Channels.
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase 2020 K. Al Awadi

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